Riding the Unicorn

 Peloton accidentally built a fitness cult. A business is a little more complicated.

Social-media posts from Peloton riders. Photo: Instagram
Social-media posts from Peloton riders. Photo: Instagram
Social-media posts from Peloton riders. Photo: Instagram

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On Thursday, September 26, stock in the fitness company Peloton began trading on NASDAQ. It didn’t go that well. The company-slash-cult, which sells expensive stationary bikes and treadmills equipped with screens for livestreaming intense fitness classes, wound up opening at $27 a share — a price that valued the whole company at close to $8 billion. It closed at $25.76 — not a bonanza day. Still, everyone was cheering, not least because cheering is a reflex for a lot of people in the fitness world, and a number of the Peloton team members who had gathered in Times Square that morning are in the business of motivation. Mostly, though, they were cheering because predictions for the debut had been even worse. And because, even with that price decline, you’re still talking about a $7 billion company selling something not hugely different from the bike that sat unused for years in my grandfather’s Boca Raton apartment after he had a stroke. Which is all to say that, despite some negative press the next morning, Peloton’s prospects are still looking pretty good.

Peloton was founded in 2012 by John Foley, a Harvard M.B.A. and tech executive who had worked at Barry Diller’s IAC and at Foley and his wife both loved boutique fitness but realized, when their two children were born, that it might be years before they had time to go out for classes again.

The idea was a simple and somewhat obvious one in the age of streaming media and expected convenience: Why shouldn’t top-level spin classes (and strength and stretch and yoga classes) be available on demand? That way, you could deliver the focused energy of a class without any of the ickiness of sprayed sweat and other people’s grunting or the stress of accommodating someone else’s schedule. But it took Foley a while to raise the capital he needed to start; he often tells the story of how 400 investors turned him down, leading him to raise a little more than $300,000 in a Kickstarter campaign, promising anyone who invested over $1,000 a year of “free” classes. By 2018, the company had raised close to a billion dollars and signed a lease on 35,000 square feet in the new Brookfield development near Hudson Yards for a mega media studio, home base, and mecca from which to stream classes to (the company hoped) millions of fitness-hungry, time-starved people all over the whole entire world.

That valuation seemed to make sense — as did the company’s designation as the first “fitness unicorn.” (For a while, every sector seemed to need one.) To begin with, Peloton carried the promise of being infinitely scalable. Sure, there are a relatively limited number of people out there willing to spend more than $2,000 on a piece of exercise equipment, but that number seemed to be growing — wealthy people are always down to throw some cash at body-fixing. And subscriptions tend to be a great business, since so few people ever cancel them, even when they stop using the service. Plus, at $39 a month for the streaming classes, membership to Peloton costs less than membership to most gyms — never mind a single class at a boutique fitness chain in New York, London, or Los Angeles, which can easily cost that much or more. And managing the quality of streamed offerings would be much easier than IRL studios, each of which has to be staffed separately. Because in the world of boutique fitness, the instructors are everything. They lead the exercises, yes, but they also go guru, offering aphorisms and encouragement and the kind of life advice that quotes perfectly on Instagram. The devoted form deep attachments to a few stars, while lesser instructors often fail to fill their classes. With streaming, the instructor roster can stay tiny, featuring only the stars—and whatever you may have heard about the cult of SoulCycle instructors, who lead classes of about 60 a couple of times a day, Peloton instructors, who often lead classes of 6,000, have become stars of an entirely different magnitude. Janet Fitzgerald, the beloved master instructor of SoulCycle, has a committed fan base: 9,319 followers on Instagram. Robin Arzon, the head instructor at Peloton, has 273,000. In 2018, 19,700 people took a “turkey burn” Thanksgiving Day Peloton class at exactly the same time.

On a disgusting, steamy New York City summer night, the Peloton studio, where especially devoted riders can choose to sweat together, smells like a deli steam table: hot, wet, disturbingly alive. But no one seems to mind. In the locker room, talk is of how to get off the wait list for the class that’s about to start. The mood is giddy: Three couples from Plainview, Long Island, are wearing matching Peloton tank tops and giggling on the leather sofas. They’ve made this trip to mecca because one of their group has reached the important milestone of her 100th — “century” in Pelospeak — ride, and milestones are important in this world. The class is not hugely different from any of the other spin classes taking place all over Manhattan at this postwork, predinner hour, but the thousands of people logging on in their home offices and garage basements are a presence: On Peloton, each rider has a user name (@ridesfordonuts, for example, or @ridesforpizza or @ridesforchardonnay), and statistics about the ride — speed, resistance, kilowatt output, rank — appear on the side of the screen on the “leaderboard.” This is what user-experience people in Silicon Valley used to call “gamification” — importing video-game reward systems into real-life situations, which has the added virtue of turning every device and app into a slot machine designed to hook the user. Peloton gives riders what they may not have known they wanted: naked competition.

But the mood is still, somehow, convivial. Riders are able to interact with each other, offering virtual high fives and shout-outs, and also to see where they rank in relation to one another and to all those people riding at home. When the class is finished, the instructors make their way to the lobby, red-faced and sweaty, then through the branded step-and-repeat background that is permanently set up. The sweating, smiling pupils then line up for selfies, flexing biceps and making bunny ears. Right away, they post on social media, so their Peloton friends can like their posts and share them and praise the effort, the commitment, the abs.

That this community would form such an enormous part of the business was never the plan — it was more of a “happy accident.” Peloton first realized that the cult part was a big deal in October 2015, when a rider named Lori Roth from Ohio called up the studio to let the company know that she and 25 other people she’d “met” on the leaderboard had gathered in New York for a class. They were calling it the “Home Rider Invasion,” or the HRI. The then-small (60-person) Peloton staff was thrilled and invited them upstairs, where they met Foley, hugged their favorite instructor (Jennifer Schreiber Sherman, with long blonde hair and a tendency to play a lot of classic rock), and took a zillion smiling, laughing group photographs, which they immediately posted online. Other members started getting the same idea, and then Peloton started advertising. The May 2019 meetup hosted 3,000 riders from 49 states (plus Puerto Rico, the U.K., and Canada). Tickets sold out in ten minutes.

Yanina Livingston, a stay-at-home mother of four in a Boston suburb who just completed her 1,000th ride, spends a good deal of her off-the-bike time engaging with the Peloton riders she has met on the leaderboard. “Amy,” she tells me, “I don’t want to ride. I don’t ever want to ride. A good-hair day is a good-enough excuse for me not to ride, and now I’m riding five or six times a week because we have built such a supportive community. You will never leave another rider alone.”

Livingston is the co-founder of a Facebook community for fans of Sherman (“JSS” to Livingston and the rest of the “JSS tribe”). “My Peloton friends are definitely my real friends,” Livingston says. I wonder whether she’s met any of them in real life. Some of them is the answer. She’s even vacationed with them and visited them, sleeping in spare rooms, introducing spouses and children.

“I’m constantly telling my kids on social media: Be careful! You’re chatting with strangers! And they’re like, ‘Um, you’re doing the exact same thing.’ But you meet these people and they’re just like you. Look, Amy. The bike is not cheap, you have to have some disposable money to invest, and that narrows it down. It’s people who come from the same walks of life.”

A lot of the talk in the Peloton moms’ group concerns home renovations, outfit consults, and luxury-handbag selection. “I realized that people are actually lonely,” Livingston says, “and if you are a lonely person, because of your job, or your relationships, or your body, and you get on your bike and you sweat it out, and then you get a group of people saying, ‘You go, girl’ — oh my God, you got a shout-out — and all of a sudden you get 100 likes or 200 comments, you feel, I’m not that alone.” In this way, the cult of Peloton is simply a very contemporary mash-up of the very on-trend religion of high-end fitness (and self-improvement) and the social-media culture of competitive self-love. But the connections with other riders do seem to be meaningful. “Now 99 percent of the posts in the moms’ group start with ‘NPR,’ which means ‘Non-Peloton-Related,’ ” says Livingston, “and those are like, ‘My kid has lice,’ ‘My husband left me.’ It goes so beyond the bike.”

The information that riders share with one another is sometimes shockingly personal: a woman whose husband trolled Grindr during a family vacation and brought someone home (“boob + man parts still,” she specified), another woman whose ex-husband is quarreling with her over child-support payments. There are a lot of graphic pictures of rashes and scrapes and bumps with crowdsourced diagnoses. There’s at least one known Peloton marriage out there—they met on a Peloton message board, and now she’s moving herself and her Peloton from Minnesota to Arizona to ride forevermore. There’s also the irony-steeped Peloton “Motherfunners,” who call themselves “a stationary biker gang celebrating the love of our crotch goblins, bang spiked seltzers, and the bike that goes nowhere.” The content is not dissimilar from what you find on the Peloton moms’ page, but the Motherfunners say it less earnestly and also say fuck a lot more.

And then there’s the branding of Peloton, no small part of what has made it basically an empowering global message board for upwardly mobile women ages 25 to 55. There’s always been something a little bit tragic about home exercise, about the claustrophobia and mundanity of it, about replicating activities — running, biking — originally designed for transport, for fresh air in the lungs and cheeks going pink and vistas and neighborhoods traversed and admired, inside, in our most neglected domestic spaces. Peloton’s whole plan was to counter that perception, to position home exercise as a luxury as opposed to a compromise. Hugh Jackman rides a Peloton. And so, reportedly, does Michelle Obama!

An advertising push showed the Peloton bike in a bunch of luxurious homes, such conspicuous wealth porn that a Twitter thread popped up to make fun of the idea that an at-home exercise bike could be glamorous and that anyone other than Lauren Sanchez actually lives in these kinds of homes. “I had my carpenter build a $9,000 finished wood riser for my Peloton bike in my glass-enclosed zen garden/home gym,” reads one. “In the mornings, after my housekeeper meticulously makes my bed, I like to ride my Peloton bike in the window of my high rise and literally look down my nose at people,” reads another.

But there really is something different about Peloton, and it’s not that it looks nicer in your house. (It really doesn’t. A stationary bike is a bike is a bike, and it will always be a good place to leave a damp towel to dry.) The company loaned me one over the summer, and I’ve been taking classes. I was arrogant at first: I’ve been going to SoulCycle for years. I figured it would be cake, that I’d soar calmly to the top of the leaderboard and then gently dry my brow. But Peloton classes are really hard! The quantifiers on the screen led me to wonder if I spend a little too much of my time at SoulCycle “manifesting” and “meditating” in the candlelight instead of properly working out.

My children busted into the room where I was riding more than once, concerned at the sound of my wretched, struggling breath. During big pushes, I often thought I might vomit all over the floor. After class, the Peloton-provided mat was always drenched with slick puddles of sweat, my face was more aubergine than red, and it took all day to calm down. I’m super into it.

I also started to feel weirdly connected to the instructors, like Joaquin Phoenix to Scarlett Johansson’s voice in Her. I was spending 45 minutes a day locked in (pretend, one-sided) deep eye contact in an underfurnished guest room instead of taking a bike ride with my family or walking around outside and potentially running into friends, and I started to think of the instructors not as friends, exactly, but certainly not not friends.

A year ago, there wasn’t anything a start-up would want to be called more than a unicorn. But it hasn’t been a great moment for big tech going public: Uber is now worth less than half of the most idealistic expectations for its IPO, and shares of Lyft have fallen nearly 50 percent since its debut in March. And, of course, in September, WeWork pulled its IPO altogether, having revised its valuation down tenfold from a fund-raising round earlier this year. Postmates has delayed its IPO until at least 2020; Airbnb will wait as well. On Wall Street, chastened by a few burnouts, there’s a growing skepticism about the bottom lines of growth-dependent businesses and an impression that venture capital has run wild, with too much enthusiasm and money going to unproven companies with untested and inexperienced leadership looking to cash out at an unrealistically high valuation.

The claims of the companies are as big as the investments. WeWork was not going to make it easy to lease office space during the rise of the gig economy; it was going to “elevate the world’s consciousness.” Peloton doesn’t just make it easier to work out when you don’t have child care; it “sells happiness.”

So far, Peloton has sold 577,000 machines and registered about a million and a half members. Growth rates are accelerating, and the fees (for both the equipment and the content) include about a 40 percent profit margin. According to the prospectus, Peloton’s revenues grew 99 percent in the fiscal year ending June 2018 and rose 110 percent, to $915 million, in fiscal 2019. But the company, which is planning its big move uptown in spring 2020, as well as aggressive European expansion, posted a net loss last year of $196 million (largely by acquiring treadmill inventory and opening lots of new showrooms).

These numbers aren’t exactly what investors want to see — with margins that large and growth that impressive, it’s sort of hard to post such a significant loss.

There’s also the problem of music licensing. Music is a key aspect of a successful spin class, a motivator. Classes can be searched that way — hip-hop, ’80s, classic rock — and there are sing-alongs, and an ’80s ride where the instructor reads out poignant memories shared by riders for specific songs. Music is mentioned 174 times in the IPO documents. Peloton has, so far, paid $50 million in licensing fees. The National Music Publishers Association, however, sued, first for $150 million on March 19 and then, after reviewing the full catalogue of archived classes, doubling the claim of the lawsuit. There are, of course, ways around this, like asking Peloton instructors to use lesser-known music, partnering with artists who want exposure, and so on, but as anyone who has ever spun can tell you, the music is kind of the key. When you’re stuck, it’s “Lose Yourself” you want to hear, or “Like a Prayer,” or “Sweet Child of Mine,” or “Eye of the Tiger,” not some deep cut off a new album from a teenager on the make.

There’s also another lawsuit, this one about the bike itself, brought by Eric Villency, the industrial designer who worked with Peloton on the equipment design (fun fact: Villency was once married to Kimberly Guilfoyle — after Gavin Newsom but before Donald “Junior Mint” Trump Jr.). Villency, who also designed the yellow SoulCycle bike, went on to form an LLC that immediately sued Peloton for infringing a newly acquired patent, in essence asking Peloton to buy the bikes back. (Peloton filed a countersuit; the expensive litigation is ongoing.)

Even at its current rate of growth, which may not be sustainable, Peloton won’t be profitable until 2023, which is one reason investors raised eyebrows when John Foley went on CNBC in May 2018 and called Peloton “weirdly profitable.” And who knows what will be happening in 2023? Trendy exercises tend to have a pretty high burnout rate: In the course of my exercising adult life, I’ve witnessed not only the rise but also the fall of step aerobics and Tae Bo and Zumba. Now it’s all about dance cardio, and something called the Class by Taryn Toomey, which involves a lot of burpees and also primal screams, but how long will that last?

Plus the core proposition of Peloton — SoulCycle but through an app! — turns out to be highly reproducible. SoulCycle now offers a feature called “SoulBeat” at some studios, which allows riders to access statistics about their ride after class. Flywheel, the studio cycling class with a metrics system most like Peloton’s, started streaming its classes in 2017. And probably there will be more competitors, because there’s not anything proprietary about what Peloton is doing. Which means the company is less in the business of selling a product, or even a service, than of pushing its own cult. To judge from the number of Peloton tattoos people are getting, it may be succeeding. Whatever the fate of the IPO, those turkey-burn rides are going to grow.

*This article appears in the October 14, 2019, issue of New York Magazine. Subscribe Now!

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